And you thought real estate sucked?  According to an article in the Arizona Republic this weekend by Russ Wiles, stock values overall have gone nowhere since the late 1990s.  This is a rare occurrence, and hasn’t happened since the stagflation days of the late 1960s and 1970s.  He calls it the “lost decade.”

The current 10 year stretch is looking worse than anything that happened back then, and could wind up as the worst 10 year period ever.  Not only are current stock prices lower, but values are down even if you factor in reinvested dividends along the way.

Including dividends, the worst 10 year stretch back then was 1965 through 1974, when stocks posted a positive yearly return of 1.2%.  If the S&P 500 finishes this year down roughly 40%, about where it stands now, that would translate into an average annual compounded loss of 1 percent from 1999 through 2008, slightly eclipsing the worst ever in history – a 0.9% yearly decline during the Great Depression years from 1929 through 1938.

By almost all calculations, holding real estate for a 10 year period of time, going back from today, will result in a much higher gain. So it appears that the smart money has been in real estate, not the stock market, and I see no reason why that won’t continue in the next 10 years.  When you consider the current low prices, it appears that the values can go nowhere but up – and appreciation will return to at least historical levels.